China

China’s rise as a quasi-superpower represents the most important change in the international system in the 21st century. China is now widely viewed as the de facto strategic rival of the United States and a potential challenger to US global supremacy, particularly in the Asia Pacific.

Many observers have described Chinese diplomacy as newly and increasingly assertive in the wake of rising tensions in the South China Sea. How should we understand this ‘new’ assertiveness?

China’s diminished growth prospects have figured prominently in recent commentaries about global economic conditions and world stock markets (e.g. Frankel 2016). The general view, with which I concur, is that China will grow in the future at a much slower rate than it has in recent decades. This growth slowdown will reduce international trade and has probably contributed already to the depression in oil prices (Blanchard 2016).

One of the biggest annual celebrations around the world is upon us. February 8 marks the start of the Lunar New Year in China. Also known as the Spring Festival, it is the most important holiday in the Chinese calendar, akin to Christmas in the West. An important time of family reunions and catching up with old friends, it is also a huge consumer holiday, as people usher in the year of the monkey.

Chinese markets will be closed next week for the Lunar New Year celebration. However, over the weekend, China will report its January reserve figures. The market suspects that the PBOC burnt through another $120 bln of reserves.

China's reserves stood at $3.81 trillion in January 2015. There are expected to stand near $3.21 trillion as of the end of last month.

For China, the story for its economy in 2015 simply reinforced what was already becoming apparent through 2014. GDP growth was slowing, and the political capital the Communist Party could collect from lauding this one statistic was diminishing.

Premier Li Keqiang even suggested in November that growth would fall from `around 7 percent’, to something closer to 6.5 percent. The era of the `new normal’ was well and truly upon China. The need to increase its performance in services, raise consumption and support urbanisation was therefore also growing.

President Xi Jinping’s three-nation tour in the Middle East heralds a shift from US regime change to Chinese economic development.

President Xi’s tour took place amid a perilous moment in the region. Saudi Arabia is struggling with the plunge of oil prices, rapidly rising debt and a war against Yemen. In Egypt, opposition is increasing against the perceived successors of President Hosni Mubarak’s three-decade long rule. In Iran, sanctions have been lifted after decades of international insulation.

After intensive industrialization, growth deceleration is natural. No nation has enjoyed sustained double-digit growth after industrialization. The real test of resilience is the continued increase of Chinese living standards.

China has posted its lowest annual GDP growth since 1990. The slowdown is seen as a major concern for some investors, but against a backdrop of disappointing consumer spending, intensifying deflationary pressures, tepid export growth, and a stock market that looks out of control, 6.9% growth was expected for 2015. It is not the stellar growth of the past decades and is down from 7.3% a year earlier, but it is still decent given local and global economic conditions.

When the 18th Central Committee of the Chinese Communist Party (CCP) decided to abolish the one-child policy in October 2015 it made headlines throughout the world. However, while the abolition of the policy is the result of the Chinese government’s newfound concern over low fertility, the low birth rate is only one of several major demographic challenges facing China.

These days, political death in China comes in two moves. The first is when the dreaded Central Discipline and Inspection Commission (CDIC) announce that you are under investigation. After that, you live on a sort of life-support machine until the final blade falls with your expulsion from the Communist Party. Then there is no turning back.